Pennsylvania’s Empty Promise on Property Tax Reform

It happens every spring, when the governor’s budget address spurs the Pennsylvania General Assembly into action. Like the sophisticated signaling network that enables plants to green and flower with the season, a perennial topic stirs within lawmakers and they begin to nurture the idea that resonates so well with their constituents: “Let’s repeal the school property tax!”

And the buzz begins.

This would be amusing to witness if the consequences of property tax “reform” weren’t so alarming and if the possibility of passage weren’t so real: The bill by state Sen. David Argall, R-Schuylkill, failed by only one vote last year, and in the November election, the GOP widened its majority control of both the House and Senate. I use scare quotes with the word because it’s not reform in the typical definition of improving upon a social, political or economic practice. Instead, this vow to relieve taxpayers’ burden for the commonwealth’s public schools is mere rhetoric, an empty promise.

The school property tax elimination bill gaining momentum at the Capitol — HB/SB 76 — would not deliver true tax elimination for most taxpayers. In fact, under the Property Tax Independence Act, you could end up paying more money to Harrisburg — in sales, personal income and, yes, even property taxes.

That’s because the bill would not eliminate municipal or county property taxes, and school districts could continue to collect real estate taxes to pay off existing debt, which is typically issued as 20-year bonds. An analysis by the Pennsylvania Association of School Business Officials found that only 2 percent of school districts could totally cut their tax levies.

Moreover, the association warns that the $2.7 billion in property tax paid by businesses across Pennsylvania would shift to individuals in the form of higher personal income and sales taxes. That means Wal-Mart gets a free ride at your expense.

This scenario shows how the bill could cost a Pittsburgh family more money:

• The bill would raise the state sales tax from 6 to 7 percent — 8 percent in Allegheny County — and expand the tax to cover a broad range of products and services that are now exempt, including clothing items above $50 and food. Think about your weekly grocery bill, that date-night dinner for two, the cost of prescription drugs, new clothing for the school year or Christmas gifts. Do you pay for child care? That, too, would be subject to tax. Get out your calculator if you plan to buy big-ticket items such as appliances or a car.

• The personal income tax would go from 3.07 percent to 4.95 percent. So, if you earn $50,000, your state income tax would jump from $1,535 to $2,475.

• If you own a home assessed at $100,000, your current combined property taxes are $2,288 without homestead or senior exemptions. Even if the school property tax of $984 were eliminated, your $940 increase in state income tax would nearly equal that.

This bill has serious ramifications beyond economics. Chief among these is loss of local control. Eliminating school property tax does away with local control — school boards wouldn’t have taxing authority. The state would oversee and second-guess the board members you carefully elected to make important decisions about running your child’s school.

If the Legislature repeals the school property tax, starting July 1 districts would receive state reimbursements quarterly (with cost-of-living adjustment). That would lock in existing funding disparities among districts across the state.

It’s important to speak out about this issue — even if you think it’s a tired topic. Educate your neighbors, and make your concerns about the details of HB/SB 76 known to your legislators. Are you truly comfortable with wresting control of public school funding away from local communities?

Ira Weiss, the founder of Weiss Burkardt Kramer LLC, serves as the solicitor for the Pittsburgh Public Schools and several other school districts (iweiss@wbklegal.com).